Ningde Times released its 2024 quarterly report, achieving revenue of 79.771 billion yuan, a year-on-year decrease of 10.41%, and net profit to mother of 10.510 billion yuan, an increase of 7.00% year-on-year, after deducting non-net profit of 9.247 billion yuan, an increase of 18.56% over the previous year. The company once again delivered consistently steady and better-than-expected results.
Incident comments
The 2024Q1 company achieved sales volume at roughly the same rate as the industry's growth rate. In terms of terminals, in January-January 2024, the company's global power battery market share was 38.4% (2023Q1 was 35%), which is better than the industry. Energy storage batteries may be slightly lower than the industry's growth rate due to a relatively high share of overseas batteries.
In terms of profitability, the company's apparent gross profit margin was 26.4%, an increase of 0.8 pct over the previous month; the overall profit after deduction was 0.1 yuan, slightly lower than 0.11 yuan in 2023Q4, but it was basically the same as the full year of 2023, and profitability remained steady. Among the financial categories, what may have an impact on actual profits is: 1) The debt is expected to increase by 5.66 billion yuan in 2024Q1. In addition to additional guarantees reflected in the 4.25% sales expense ratio, the estimated rebate calculation is also reflected. 2) Financial expenses amounted to RMB 313 million. It is estimated that 2024Q1 will generate an exchange loss of 1.9 billion yuan, which is expected to be partially hedged against gross profit. 3) Other revenue of $3.21 billion, of which government subsidies are about $1.82 billion. The rest is expected to be affected by VAT credits (it is expected that 2024Q1 will have some credits retroactive to 2023, and will be calculated quarterly). 4) The management cost ratio and R&D expenses were high in the first quarter, which is related to the low demand season in the industry. 5) Asset impairment losses of 5.1 billion yuan and credit impairment losses of 270 million yuan, and maintain strict treatment.
The company also mentioned during the performance briefing that it is expected that when product prices fluctuate greatly, reasonable estimates are made according to the principle of prudence to ensure that price and profit fluctuations will not be so obvious, which fully stabilizes the company's profit expectations. We believe that the quality of balance sheets and cash flow statements in the Ningde era was more important than profit statements. The estimated debt of the 2024Q1 company is still increasing sharply from month to month, with net operating cash flow of 28.358 billion yuan, far exceeding the net profit level, all indicating the company's strong operations and finances.
Based on the excellent performance of the first quarterly report, the net profit returned to mother during the entire year of the Shangxiu Ningde Era reached 50 billion yuan, which is only 17 times PE, and continues to be recommended.
Risk warning
1. The risk of vehicle price reduction pressure is transmitted upstream;
2. The risk that demand in the power battery industry falls short of expectations.